USANA Health Sciences (USNA) 7 Feb 242023 Q4 Earnings call transcript

Hello, and welcome to USANA Health Sciences Fourth Quarter and Fiscal Year 2023 Earnings Call. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I'll now turn the call over to Andrew Masuda. Please go ahead.

good and Melissa, you, morning, everyone. Thank you and fiscal appreciate joining us quarter fourth our review year to We XXXX results.

Today's from ir.usana.com. broadcast be a conference live via available be webcast being call on and replay our will accessed our following Shortly directly at website the call, is website. can

our course this future future the events call, reminder, company. will management of a As of make during or financial the conference forward-looking regarding performance statements

perhaps materially statements these actual differ Those our risks results such for in that and statements outlook year fiscal regarding of the cause could from forward-looking involve uncertainties those strategies Examples projected and XXXX. results to statements. include

that uncertainty SEC. with data around to operations filings contained results. risk our including these well economic and recent with be the you specific financial financial related considered in statements the as disclosures, factors should conjunction world, in operating environment and and most As caution our the We

Officer, our our I'm President by Financial other joined as Jim and Brown; well executives. as Chief Doug CEO, Hekking;

before questions. closed, the now our posted the and quarter year fiscal to after our from fourth for we and Yesterday, commentary remarks Jim brief company's call website. results document hear the We'll management announced opening market

of sequential Thank delivered key operating sales region our several active delivered expectations incentive markets. and force an China morning, as Notably, in Greater double-digit responded fourth you, our Andrew, results customers. everyone. in USANA offering our good our quarter that exceeded growth positively to

behavior and top was our and many inflation generate other line our particularly the in because year-end as We of impacted factors to momentum. are adversely ability incentive, pleased XXXX in operating with the consumer economic adoption this results and of our markets environment challenging

strong $XXX delivered fourth generate in diluted net we million cash the Despite cash with year EPS flow. above this continue and essentially to and expectations. free as We ended debt-free environment, sales we quarter

several to meaningful XXXX, fiscal renewed market USANA's strategic preparation. XXth on operations growth We which years of the growth. customer for progress that milestone with for active USANA make global significant India, executing XXXX strategy following begin at the end consistent which launched our initiatives in we is foundational is focus are company's officially of continue generating global growth. a We on future And fiscal

The acquisition sales our to operations increasing initiatives incentive strategy associate that drive include in actively opportunities. with sales engagement and are growth, innovation associate this development expanding our and leaders for growth building customer additional our and customer our India, pursuing that and enhancing opportunities generating leaders and accelerate product

additional to our provide briefly details initiative on I'll our increase with associate engagement leaders.

globally. a setting associates was and leaders reengaging training active XXXX be a and doubling educating focus associate on with on live with a growing While in down our engaging, associates we'll XXXX, of our year

recognize our While and overall products. customer market goal, our growth we model business is our sell relies independent that upon our always to distributors

this For our focus associate renewing XXXX. on growth in reason, we are

help this this offers year, message. be product nutritional with to differentiation effectively And supplements. associates our communicate USANA best-in-class collaborating them we'll

tools, which digital help the and to communication onboarding, business. more will necessary managing existing for and essential training, updates plan resources to associates we Additionally, our out growing our their roll with marketing

long-term I'm for for I'll of well our earnings. now the long-term confident in In and health the sales questions. please operator With the in business strategies lines to success wellness and expand our positioned and growth remains will that, global closing, USANA open market. our execution sustainable net successful that ask drive

Anthony Sidoti first is our question & Company. from And [Operator Lebiedzinski Instructions] with

Certainly China a the job nice see quarter fourth doing better. results. with Good to

big of maybe curious, picture just So kind I guess, first.

bit month year. more you're XXXX start into the you a as fiscal now, little current a than So

doing are maybe do countries just you do could you as than sense if you give to which a China pressure like conversely, weakest see the And points? wondering better? think where us Just other

is Anthony, Doug. this

game. think pretty in the early I it's

has is pattern I see fairly been the consistent. you that think --

we put offset of Lunar in a we response kind think promotion to a I little color holiday. saw the document talking New our Year commentary to initial the management about

saw the we're we're we pretty by kind so reported there, of and But watching Year. of first of And encouraged New the kind quarter. what the I there, impact we and outside think in still evaluating through Lunar

some a So to look on give first but quarter. it's bit after color we'll definitely little the that early,

Understood.

as far ahead price guys you so some Okay. year, And in last increases, 'XX. had of customers so first impacted quarter as buying then which pricing, your

see this as as pricing? year? can pricing perhaps as of anything year do what like we you that? not looking last far we And repeat to could So a as expect far did just Or

I would that's out. and we've it expect why called Yes. that, not

think last approached basis X% last to a we've how on I in year pricing that X% we've somewhere tepid had pretty before we did global and it, as we year. been the years basis, several on an the average in far as adjustment probably

You definitely what the And response beyond little because the having year typically just was -- and this above bit won't that last of a adjustment. bigger see see year. we

And seen have. we're definitely others not moving as fast as we've

think we conscientious the with first So to call sales out end won't that's that why and the to the our at very in you leadership fourth saw of but response and see the 'XX. that magnitude. we've boost that, quarter same approach And both the it's immunity quarter of working how been we the I appropriate and

to us expectation don't just as, the of maybe your you planned will you of can kind for and think spending what that on help be as understand on and return want as the as know how just of India about also, far or additional that as amount far the one talk if as we the Rise spending you've that timing Bar, as a as far put should acquisitions, far then dollar that? I And about

an start I'll But we Jim year. Yes. will this definitely investment and here, year I'll have in. jump plan, be

there. get level set plans. of great with Bar think Rise some We've this to integration, wanted to has opportunity we -- kind kind everything of -- -- get the there. things we're think the we And commercial group kind of there's compiled with we're doing I of some way

And so be that, where traction upcoming of we expect in but pretty won't investment in this do sales. year will good a profitable be some year we

same. is much India And the

think we the really towards India I that opened think the very of I doing end anticipating we're and year, earlier.

leaders understand events to get been a market forward And best of to opening of really costs our want some long significance good But put with stuff this term. those really the start of kind and those have And of foot these to some off that celebrations other and we we pushed 'XX. we sure make and there. and engage

sales And between see long-term benefits. those operating and color? $X but $X think million Jim, we money collectively any well probably so I additional you'll negative that's between between the net generate margin two categories, in think invested. those And future million we'll

get to be quite or and me Yes, for I to the exactly called And what again, else expect we a But year. XXXX. basically flat this they want forward there. from just in down But we future. out. profit an out investment Doug, honestly, both know time momentum what put moving to mean the it to businesses, this we're in do don't is standpoint I looking

lastly, color. That's I And on then it very others. to pass before helpful

So you the run like you than balance have need business. more strong. to cash obviously your sheet looks continues be It to

you priorities capital think So how should the we allocation about for guys?

it what in very Well, done we've I think remains the similar to past.

been we think always go that. we've lean and really several I After and opportunities we quarters our the about in I evaluated that into into have invest the look think always selling that, organically and several in activity now direct talking of hopper M&A, to down back kind really business in moving we've path. and for

open past, and in program, share we've are things It's Board invested heavily been of the the pretty a repurchase quarterly but it's a discussion. Directors, in then those discussion with balanced. very And

even the the So of that that's operate opportunities trying and evaluate I not I'm accordingly. saying And say, just business, without would the debt, environment say, go stage current for to our at and invest and level goal. in at I at, context would to they're an back

need and it gauge China. kind you given waiting a roughly a dynamics of repatriating process cash the ballpark, back -- is where little to with market that held some always probably there that of becomes a go We of game liquidity and from it's China. in the can cash you bit $XXX just from unique that's through million and then And that's

question is Linda next Davidson. D.A. Our from Bolton-Weiser with

hello. Yes,

on I first, was I So cost just wondering, guess. the side

that down were continue cost quarters? had for in mentioned forward Is to sustainable going freight year-over-year next few cash for comparison quarter. to year-over-year? that freight the expect Can now a we down that be the You

be will it's I'd down year-over-year. say it Yes, sustainable, and

but and shipments the and that, expediting we're like order out times do or We had well go and the downs not through got can and and rates transit stabilization we COVID, we make it's a everything on costs COVID that. that back of gone of to right sure after ups on of didn't after better we the as any just and times, freight lead depend haven't as really to

can the manner. that has say would really a locating one will ops a in absorber bit us respond help I done of Yes. shock help the a other in timely the in job any also good a with have doing inventory more of to things market little change is the demand out stuff we team more that

And And the stability efforts big airfreight, chain there. the supply contribute really of strategic Jim think teams supply said, the think I delta I with just positively both chain is there. I so along is, the is general, and procurement think, like the absence of which pretty of the really it in

it, a stock $XX-ish our see at couldn't million on stuff that $XXX and just because where we of up. level amount now, and back ago, to we years had million inventory can you up And Linda, depend were right few we too,

better hats that that And that managing will again, business and off teams the logistics our think now. I to of So operational just, the the remain companies is same dependability around having amount.

here was Malaysia helps just X% that's good. Okay. local the Philippines then Philippines curious the up and still you and Malaysia, currency, so Malaysia mentioned weak. Philippines and what the promotion performance? Philippines about because Great. But And and it was you then Malaysia difference or that work in was promotional the same initiative I the between the the is didn't Did just try

in and in. chime is Neidig Brent unique. here, very are I'll markets him let The Yes.

I think minded. who response. are back entrepreneur market Philippines a can people pretty he But is and a the with great very go articulate give

obviously that environment COVID done. there, market hit Brent? We're think work And I the operating the has it point. is be optimistic but particularly to what environment this at hard. still there's is

the think the Malaysia it, that And why One differently. has several did. effectively Doug they hit responded the Linda. Malaysia the market which of each socioeconomic but one environment, didn't quite promotion mentioned I factors. of has, I respond markets, is parameters of on indicators across the Philippines were as Hi, as think similar depends been than harder is primary

Okay. down interpret was slightly. that And that year-over-year, I sort an of curious active in lower so about performance like that were but better information? per sales local still of there. Mainland guess or average customers currency how customer then I'm China, being X% kind ticket like is I up the Is just But do

Yes. the count I little look metric. our quarterly full that's when currency would customer a at and a a think I pretty roll hefty has a primarily Remember, of impact been bit year-on-year year-over-year, say year. is played you

pretty our But look China. have is we I And consideration. that full encouraging I year, a as the opportunities Brent, quite with so at as for have that the pleased to the as resilience we see been businesses of look know, And optimistic, into with well. us team in you and take just think we've other things pretty you at to done different we've there things few that

perhaps I'd that we've the slightly different we function customer has also the that say that a per the spend incentives of been down. it's run promotions had

and are to ultimate with okay retain our and is We We consumers goal that. -- attract customers.

we increased, indicator want build us that on continue a momentum. good And to so long-term that's we see to that number customer that active as to

more one ask Well, let just thing. me

of promotions What's something in guess plan XXXX, on But do the pull the them in here big terms plan? the back the or that, what going you cadence of so Are quarter. there? be these In doing beyond would kind you've mentioned promotional still to of I periodically. events first

Yes, real high level.

heavy promotional we think but are really years the individual than lighter we depended COVID on coming XXXX had little a X been markets where I a during the bit we're it and off at. historically, of were cadence years

So in I us 'XX. see -- up were where we're is a think culture. you'll tick This sales in from we

promotions. and and do go and and to back that get incentives Brent? to going point, things traction going us always back You're forward. have And go to Brent's sustainable growth really will looking those

for direction package ensure degree, that well of individualized look markets. really XXXX In we're they've promotions the incentive and some been resonate been they right market certain structure and past, moving a nature, we The and market to in is by the in have these sometimes each larger don't but have market. for as effective to global

going forward what's going and local to we intention really motivate best incentivize the them and leaders the So that identify we're is sales ensure to can. that supporting way our

Genuity. is question next Anderson Our from with Canaccord Susan

trying pass it the We've about costs, curious Canal things to maybe the Suez slight I'm just transportation are really how you there. heard Just like transportation expect on quick, any navigating really through. sounds some you're providers and increases don't increases.

look extensive airfreight. costs, if in transportation past the at This you our cost has Walter. Yes. been We biggest is the --

had. And challenges so because of we've those

have are I most costs amount, routes Suez but the not our slight gone think a Canal. around up of those

So those we really haven't issues. had

is your seeing that it something of we'll to if definitely so we've an have these watched. We've things and start it we're effect, business. something have is But on past and port an monitoring, in that impact the we some that update our point, strikes seen

on all? in pulling Great. back bit you a at Okay. And sounds more like it just guess to products I question there little currency. and Linda's seeing pressured feel perspective China, fluctuations then consumer a guess, that more are it's so from macro back I your on

factors and back. that, consumer at drawn have larger look is the -- when other suppressed. the in are a you many and The you it's Yes, get data and macroeconomic Chinese that consumer weighing housing categories, And Brent. they into definitely

space I think still wellness. quite resilient. is The is on Chinese very wellness the consumer focused

future speaking regard, Who USANA space. pretty hold, fluctuation still from of we really but in we happens knows will seen factor, optimistic. that the specifically And wellness the are still has quite And it's for socioeconomic a haven't regardless been much which in think we so what what resilient. optimistic

just that on Should in benefit I was And looks slight guess we there pricing like this to Great. really then XXXX. continue quarter. Okay. quick XXXX? It for a expect

Yes.

second the narrated you adjustments to year-over-year the we in quarter think I of we'd from made 'XX. less in we quarter first did hear in this of year So meaningfully the fourth comp 'XX. beginning what what towards The have adjustments that the end be just is the going that than quarter, planned are

adjustments so relative don't inflection think And in I you'll much see prices. point to our P&L from

specific we attributes think and address. we'll same at that have it a have be we that I in be as targeted won't definitely, we did certain making that 'XX. lean looking whole, the pretty to into products But

portfolio thinking you last just on And the or is question then in any give would either that you of kind can on fill? Great. I color that M&A. products categories you're Okay. guess, to or there like holes about

the me that product -- have industry that's our of M&A they and We're that. morning get match just focus companies wellness kind this seven was Yes, that always I talking lines -- going Jim. and Walter, queue interesting. are or at a looking everything to and of that we do this six is within to excuse

right get evaluate resonate no deals company with Again, they're are wellness and We to just M&A is all interesting matter time continue want make the a smart in, them for those. thing you to it to you've where the eager are takes look healthy, and and find an the in that to and that companies help grow. we always got decision the deals area. to how

Feinseth question Financial with is Tigress Partners. from Ivan Our next

sales experienced some One, on. you on works some find the results finish. on end you the Can that? got has And I strong that do not on what best? you And great give have details two Congratulations incentives questions. well? worked year what it you have

Yes.

captured I well. think Brent it

fourth fourth one in quarter approach to what we most we most rewarding particular we're The think type in markets. doesn't in ran I the sales more something really available customers. That the quarter the new same that's then when growth the and one reaching every in seeing market. work in far was was part of for do

really like a space. you in belief a strong And a who spirit, the is have have market wellness health China very and entrepreneurial

some when stuff this, market, well. pretty resonate the those in do And line China so we with a of in is

I think or we've received promotions looked at here value those well. proposition there, get and

seeing But your typically, you're and inflection those those, counts. not when in base, necessarily customer customer you do to are marketing existing an

a is sales we else, good? act. we're think get And try to Anything to them good. Brent? different I right, Brent's different All to really point, it from so our aligned. and And we work balanced hear leaders, of You with feedback

in what's addressing in need driving progressing to have food going to GLP world primarily going Second, nutritional supplements opportunities? on drugs market protein about the in for the and those And discussions the lead is additional and been and thoughts your consumption with reduced supplements. you

will huge who it an Ivan, need we way, for offering. being -- as a mean this opportunity, now balance we eating that. look product at it. the new look as have as balance nutritionals that quite marry honestly. market our we the But people were and that's and they're people taking up having that see created. see to with to to that it's well opportunity We'll basically I And an with success is products We think same out that great at out R&D would right products less. teams

to feel part of And thought both? this M&A your develop Or confident be continue process will or that do you'll in-house? you these products

space get them. at develop, But test and say we we'll would that else. right standpoint, the that everything it initially someone it again, But M&A look definitely whatever, find on to if from in-house, time an takes we're both. and or working I in Yes, now, products,

areas One we I kind can we it that's from think could of competing reach do that ourselves, what make we USANA with premium with we're M&A. do we products, if And we and great broaden of just better, of to sure is. the the it can that just we ourselves -- operations that our is want do we we job have it, a and do when

to product people say better who current I specifically goes would And need nutrition. offering Yes. our addressing

think even opportunistic don't M&A. -- we think need I with we're to though So I

some how going think someone's I continue to and do So to discussion and additive and we're approach it we be is The with want to been be journey. responsible suited back well and go There's we on. this. wellness health development, to

our And with Instructions] [Operator Tower next is Water Doug Lane question from Research.

just a on of couple the discussion on following have I quick here. China, questions I'm up

model China. You've got selling in a direct

So view customer a forward? should would the going I is active indicator really -- we count leading

higher We always always try to the some have when think Typically, I a bringing in of give can activity perspective. quarter, color activity you you that you that was level so should. in new on in use the to that's context. customer to kind numbers going of you're not what have give acquisition. is the the the during disproportionate but It's customers elevated quarter, are, some we level to of same that average there not why that stick, and

I that. be how And so and transparent And we context. communicate to throughout tried our it very just provides think we've history

count my run business it's directionally figuring of I in the No, the double direct that is always did check. I helpful. right? the just thought very BabyCare? that's to models that wanted base business I where China, you selling really But sort going. customer off

that's Doug. accurate, Yes,

off lot of -- we fourth about regulations talk still COVID, And that I to other people companies in at the models the this space of is end the other in think, in I there. year. a don't a thing of and China, the in of that's Yes. ago year because the Zero in of wanted came that China operate complexity quarter, A were different the lot

just wondered environment put I business. if overall China So that's the your on could impacting in and you some color regulatory how

Yes.

So this is Brent.

fight the was was what USANA really they from no the During regulators much it COVID. environment were into many one country those years to help happened, country. oversaw, where X pretty of locked repositioned for they to interesting down, didn't was matter an COVID, travel able What the

or So of COVID passed back agencies would because Well, that things on reengage went we focused a fighting to that are have meetings, COVID. interactions agencies. government the now lot normal, so with historical to the COVID's less, we've with quiet during more really they had started the were and government

outlaid, before it's like to would both I And was I There's relationship. as business good understanding a to been very our there. that's have future There's typical I sides. between framework and but the think to that nothing can regulatory complying be no as about we long it what grow working say And the optimistic continue develop COVID. we think within you're reason

holding in pace to meetings back magnitude pre-COVID same or pre-COVID you're same the at the And China?

Yes.

to be China in the is That We era. COVID size. meeting and coming cadence that's Mainland actually we in now have during But severely held our returned up, going have April, our convention and was to that restricted China.

We to haven't done that. several large had years. that a We've very response in

the So event. about cadence year. optimistic that to throughout we're And very very at hold regular events continue we'll a

As would Andrew for we it no closing to questions, any like back remarks. have further turn to Masuda I over

your your you Thank questions today's and participation conference call. on for for

Investor questions, much. you contact Thank any you very have (XXX) to free If Relations at please feel XXX-XXXX. remaining

That concludes today's conference.

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